AMDP FINAL - Madewell

TO:                 Professor Clark Hansen, CEO, AMDP

FROM:           Olivia Osborne, Senior Account Executive at AMDP

DATE:            March 8, 2019

SUBJECT:     Madewell Investment Recommendation Memo

After considering your request to find a business worthy of investment from Anima Mundi Development Partners, I have concluded that Madewell, a fashion company, is the best business for AMDP to invest in. Because AMDP is committed to promoting socially responsible businesses, I believe Madewell most accurately fits our criteria.  Madewell prides itself on providing ethically made clothes at reasonable prices for its customers. As of late, Madewell has refocused its gears to become even more sustainable by further committing its efforts in ethical fashion through partnerships with non-profits. 

Below I outline our standards at AMDP to reiterate what we pride ourselves in. Later on, I will discuss how Madewell aligns our values.

AMDP Standards

Triple Bottom Line

At AMDP, we breakdown triple bottom line into three parts: social, environmental, and financial.

·      Social: We value people and focus our efforts on fair treatment of all employees and off-site labor.  

·      Environmental: Our practices must be environmentally friendly and be committed to sustainability.

·      Financial: At our core, we strive to increase our profits while still maintain ethical practices.

Corporate Social Responsibility

To AMDP, corporate social responsibility is more than just making sure our practices are honest and humane. We self regulate to ensure that our policies encompass the wellbeing of everyone involved in what we do from start to finish. As much as we value positive outcomes for our company, we also value positive outcomes for the world through our community service and philanthropy we endorse and participate in.

Social Enterprise

We combine our business efforts with the social mission of a non-profit organization to achieve outcomes that impact society and the environment.

Carbon Footprint

Carbon footprint is defined as the total amount of greenhouse gases produced by a

company, person or institution to support their activities and businesses; thus, resulting in carbon dioxide that becomes trapped in the atmosphere. It is measured in CO2e and is calculated by multiplying the emissions of each of the six greenhouse gases by its 100-year global warming potential (Carbon Trust). The increasing levels of carbon dioxide trapped in atmosphere lead to an increasing temperature of the earth’s surface, which is what causes global warming. We not only work to make our own carbon footprint low at AMDP but also require that the companies we partner with also take necessary efforts to reduce their carbon footprint.

Madewell

Known for making “great jeans”, Madewell has been around since 1937. The company was born to create casual workwear clothes that were durable and practical. As the company was going out of business, J.Crew bought the rights to it in 2006. J.Crew kept the original name yet rebranded the company to design modern-day timeless, fashionable clothes.  

In the midst of J.Crew facing its own crisis of declining sales, Madewell revived the company’s image and revenue. Many felt that J.Crew was alienating customs by only serving to older professionals. Madewell was created to step in and fill that void by offering a style that resonated with young customers. Their style was designed to provide comfort and trend without jumping onto the fast-fashion train. It is clean and simple while still providing effortless beautiful looks. In fact, Madewell became so popular, and still is, that profits increased 35% in 2014’s fiscal year. Today there are 118 Madewell stores in the United States.

Madewell: Social

According to its website, Madewell promotes responsible sourcing and supports communities through its partnerships. Madewell is a proud partner of Fair Trade USA. With Fair Trade USA, Madewell strives to work with more planet friendly factories that fairly treat and empower their employees. The certified factories they source provide benefits like maternity paid leave as well as equal pay and equal rights for women.

Madewell is also a supporter and partner of GIRLS INC. Operating in 400 cities across the U.S., GIRLS INC. boosts the confidence of young women ages 6–18 years old through after-school programs, mentorship opportunities and leadership training (Madewell Social Responsibility).

Further, Madewell also works with the Human Rights Campaign to guarantee that LGBTQ people are safe, equal, and free in every community (Madewell Social Responsibility).

Lastly, Madewell partners with Charity: Water, which is a non-profit that operates in 26 countries with a mission to provide clean drinking water to the 663 million people that live without it (Madewell Social Responsibility).

Madewell: Environment

Aside from its partnership with Fair Trade USA, Madewell minimalizes its environmental impact by working with the UPS carbon neutral shipping program to make their shipments sustainable. They also work with FabScrap, Good360 and Blue Jeans Go Green™ to ensure that their denim samples don’t go to waste and are instead recycled.

Further, Madewell also has its own denim recycling program where customers can bring in an old pair of jeans to Madewell and receive $20 towards a new pair of Madewell jeans. With the old jeans, Madewell turns them into housing insulation for organizations like Habitat for Humanity.

Madewell is committed to energy efficiency and only uses LED lighting in stores, which lasts longer and uses 80% less electricity than incandescent light bulbs.

Madewell: Financial

It is evident that Madewell has increased profits for the J.Crew company while still remaining loyal to its sustainability efforts. In the fall quarter of 2018, Madewell’s total revenues increased 3% to $587.6 million (Cision). During that same year, Madewell became a member of the Better Cotton initiative according to Madewell’s website. The Better Cotton initiative “provides training for farmers to adopt more environmentally, socially, and economically sustainable cotton production practices”; thus, improving cotton production and making it more sustainable (Madewell). Madewell is also a member of the Bluesign System, which is an independent industrial textile standard that “tracks raw materials every step of the supply chain, eliminating harmful chemicals from the very beginning” (Madewell).

Outside Opinions

Alyssa Danigelis of Environmental Leader summarized J.Crew and Madewell’s partnership with Fair Trade USA stating that it is a monumental initiative that will set an example for the fashion industry (Environmental Leader). She also notes how J.Crew has struggled with sustainability in the past.  The company has gone on record and stated the difficulty of finding transparent and ethical suppliers, which is why they have entered a partnership with Fair Trade USA to ensure they are promoting sustainable practices. With the company’s history in mind, it is important to note how this partnership is paving the way for a better future for them.

Another industry leader, Landon Peoples of Refinery29, discussed how positive of a step the partnership between Madewell (J.Crew) and Fair Trade USA is for the fashion industry. He notes how the partnership will source materials from Saitex factory and Candianai mill, which are described as ‘zero-discharge’ models that are the world’s cleanest denim factories (Refinery 29). Like Danigelis, Peoples also discusses how J.Crew has been ridiculed in the past for its environmental footprint. However, Peoples argues that those comments were made nearly a year ago and don’t take into account the new partnerships the company has made in improving its efforts. In conclusion, Peoples states that Madewell and J.Crew are heading in the right direction.

My Recommendation

The fashion industry in the United States is currently overran by fast fashion companies like H&M and Forever21 who are promoting unethical practices and encouraging environmentally harmful actions. It is vital that we invest in Madewell to support their commitment to sustainable fashion and give them the necessary funding they need to continue to expand their ethical efforts.

Works Cited

J.Crew Group, Inc. “J.Crew Group, Inc. Announces Second Quarter Fiscal 2018   Results.” PR Newswire: News Distribution, Targeting and Monitoring, 28 Aug.2018, www.prnewswire.com/news-releases/jcrew-group-inc-announces-secondquarter-fiscal-2018-results-300703590.html.

Caramela, Sammi. “What Is Corporate Social Responsibility?” Business News Daily, 8 June 2018, www.businessnewsdaily.com/4679-corporate-socialresponsibility.html.

“Carbon Footprinting Guide.” Carbon Footprint Calculator for SMEs - Carbon Trust,      www.carbontrust.com/resources/guides/carbon-footprinting-andreporting/carbon-footprinting/.

Danigelis, Alyssa. “J.Crew and Madewell Launch Fair Trade Certified Denim        

Collection.” Environmental Leader, 30 Jan. 2019,  www.environmentalleader.com/2019/01/j-crew-madewell-fair-trade/.

Darwin, Liza. “One Man Reveals The True Story Behind Madewell's ‘Heritage.’”  Refinery29, www.refinery29.com/en-us/madewell-origin-history.

Kenton, Will. “Triple Bottom Line (TBL).” Investopedia, Investopedia, 8 Feb. 2019,        www.investopedia.com/terms/t/triple-bottom-line.asp.

“OUR DENIM TECHNOLOGY, DEFINED.” Madewell, www.madewell.com/inspo style-denim-our-denim-technology-defined.html.

Peoples, Landon. “J. Crew & Madewell Partner With Fair Trade To Produce Sustainable  Denim.” Refinery29, 29 Jan. 2019, www.refinery29.com/en-us/2019/01/222920/j   crew-madewell-fair-trade-sustainability-denim.

Schlossberg, Mallory. “How J. Crew's Smaller Sister Brand Is Defying the Company's      Curse and Taking over America.” Business Insider, Business Insider, 27 June 2015, www.businessinsider.com/why-madewell-is-thriving-when-j-crew-is failing-2015-6.

“Social Enterprise.” Social Enterprise Alliance, socialenterprise.us/about/socialenterprise/.

“Social Responsibility .” Madewell, www.madewell.com/social-responsibility.html.